Canadians Forced to Make Tough Budget Decisions to Make Ends Meet, Amid Rising Interest Rates and Inflation
Over a Quarter Cutting Back on Essentials Such as Food, Utilities and Housing; Nearly Half Cutting Back on Non-Essentials Such as Travelling, Dining Out and Entertainment
- Six in ten say they are already feeling the effects of interest rate increases (59%, +7pts).
- Nearly half say they are cutting back on non-essentials such as travelling, dining out, and entertainment (46%).
- One-third are buying cheaper versions of everyday purchases (37%) and driving less (30%).
- Over a quarter are cutting back on essentials such as food, utilities, and housing (27%).
CALGARY, Alberta, July 11, 2022 (GLOBE NEWSWIRE) — As interest rates and the cost of basic necessities have continued on their upward trajectory over the past few months, Canadians are becoming acutely aware of the impact on their household budgets. Increasing a staggering seven points since last quarter, six in ten (59%) Canadians say they are already feeling the effects of interest rate increases, according to the latest MNP Consumer Debt Index, conducted quarterly by Ipsos on behalf of MNP LTD.
Many Canadians are now being forced to make tough budget decisions to make ends meet, with nearly half (46%) saying they are cutting back on non-essentials such as travelling, dining out, and entertainment, while one-third are buying cheaper versions of everyday purchases (37%) and driving less (30%). Over a quarter (27%) are making the difficult decision to cut back on essentials such as food, utilities, and housing. Women and those aged 35-54 are significantly more likely to say they will be cutting back on non-essentials (women 49% vs. men 42%, 35-54 48% vs. 55+ 48% vs. 18-34 39%) and essentials (women 30% vs. men 24%, 35-54 33% vs. 18-34 25% vs. 55+ 24%). Only one in ten (12%) are fortunate enough to say they don’t have any increased expenses to pay for.
“No matter where Canadians turn, there is no reprieve; housing is more expensive, driving a car is more expensive, food is more expensive,” says Grant Bazian, president of MNP LTD., the country’s largest insolvency firm. “Right now, many Canadian households are trying to adjust their budgets, cutting costs where they can in order to keep up with their monthly bills. But as the cost of living continues to rise – it’s likely to get worse before it gets better – households will have to make increasingly difficult choices about what to cut, and could find themselves piling on debt to make ends meet.”
Further indication that Canadians could be in for a rough rest of the year, half (50%, -1) of Canadians say that if interest rates go up much more they will be in financial trouble, with women (women 55% vs. men 45%) and those aged 18-34 and 35-54 (18-34 62% vs. 35-54 63% vs. 55+ 30%) being more likely to agree they will be in trouble. Four in ten (39%, unchanged) say that rising rates could drive them closer to bankruptcy.
Almost a quarter (24%) say they are not financially prepared to deal with an interest rate increase of one percentage point, up two points from last quarter. Moreover, over half of Canadians say they are concerned about the impact of rising interest rates on their financial situation (58%, +1pt) and are concerned with their ability to cover all living/family expenses in the next year without going further into debt (55%, +2pts). The proportion of those who agree they are concerned about the impact of rising interest rates is up 13 points since June 2017.
“With inflation nearing a 40-year high, there is mounting pressure for more aggressive interest rate hikes to tame inflation. Canadians who are not financially prepared to absorb future interest rate increases are likely to find themselves in financial trouble soon, as they are unable to manage the increasing costs of their debt repayment obligations,” says Bazian.
While the vast majority of Canadians (82%, +1pt) agree that with interest rates rising they will be more careful with how they spend their money, more than half (56%, -1pt) say that as interest rates rise, they are more concerned about their ability to pay their debts. Two in five say they are concerned about their current level of debt (41%, unchanged) and say they regret the amount of debt they’ve taken on in life (42%, -2pts).
Bazian advises those concerned about upcoming bills and debt repayments should speak with a federally-regulated Licensed Insolvency Trustee who can help determine the best debt-relief solution through a confidential, unbiased and customized assessment of their financial situation.
“There comes a point when even the strictest budget may not be enough to help an individual stave off financial problems,” says Bazian. “Only Licensed Insolvency Trustees are able to provide the full range of debt-relief options, including consumer proposals and bankruptcies, that help individuals who are experiencing unfortunate circumstances and severe financial stress to release their debts and obtain a fresh financial start.”
The MNP Consumer Debt Index is now in its fifth year quarterly tracking Canadians’ attitudes about their debt situation and their ability to meet their monthly payment obligations. Despite the current economic environment of rising inflation and surging cost of living, the financial confidence of Canadians has crept up slightly from last quarter. Now in its 21st wave, the Index increased three points since last quarter to 90 points, although still remaining well below its benchmark score established five years ago. Prior to and throughout the pandemic, the Index was averaging high 90s and over 100 but Canadian’s confidence in their personal financial situations has struggled to return to pre-pandemic scores.
Image Inclusion: The MNP Consumer Debt Index rebounded slightly to 90 points after three consecutive quarters of lower readings. Prior to and throughout the pandemic, the Index was averaging high 90s and over 100 but confidence has struggled to return to pre-pandemic scores.
About MNP LTD
MNP LTD, a division of the national accounting firm MNP LLP, is the largest insolvency practice in Canada. For more than 50 years, our experienced team of Licensed Insolvency Trustees and advisors have been working with individuals to help them recover from times of financial distress and regain control of their finances. With more than 240 Canadian offices from coast-to-coast, MNP helps thousands of Canadians each year who are struggling with an overwhelming amount of debt. Visit MNPdebt.ca to contact a Licensed Insolvency Trustee or use our free Do it Yourself (DIY) debt assessment tools. For regular, bite-sized insights about debt and personal finances, subscribe to the MNP 3 Minute Debt Break Podcast.
About the MNP Consumer Debt Index
The MNP Consumer Debt Index measures Canadians’ attitudes toward their consumer debt and gauges their ability to pay their bills, endure unexpected expenses, and absorb interest-rate fluctuations without approaching insolvency. Conducted by Ipsos and updated quarterly, the Index is an industry-leading barometer of financial pressure or relief among Canadians.
Now in its 21st wave, the Index has increased three points since last quarter to 90 points, although still remaining well below its benchmark score established five years ago. Visit MNPdebt.ca/CDI to learn more.
The data was compiled by Ipsos on behalf of MNP LTD between June 6-9 2022. For this survey, a sample of 2,000 Canadians aged 18 years and over was interviewed. Weighting was then employed to balance demographics to ensure that the sample’s composition reflects that of the adult population according to Census data and to provide results intended to approximate the sample universe. The precision of Ipsos online polls is measured using a credibility interval. In this case, the poll is accurate to within ±2.5 percentage points, 19 times out of 20, had all Canadian adults been polled. The credibility interval will be wider among subsets of the population. All sample surveys and polls may be subject to other sources of error, including, but not limited to coverage error, and measurement error.
Provincial data is available upon request.
Angela Joyce, Media Relations
e. [email protected]
Photos accompanying this announcement are available at